WestJet going ahead with wide-body aircraft

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WestJet will put its own wide-body planes in the air as early as fall 2015, a move that brings the airline closer to its long-term goal of competing head-to-head with Air Canada for overseas travellers.

The Calgary-based company said Monday it is in the “advanced stages” of sourcing its own wide-body aircraft. Bob Cummings — WestJet’s executive vice-president of sales, marketing, and guest experience — would not reveal the type of plane or whether it will be a purchase or lease arrangement, saying only that it will be a “quality, used” aircraft.

“We will be able to announce the specific aircraft by the end of the month,” Cummings said.

Adding wide-body aircraft to WestJet’s existing fleet of single-aisle Boeing 737s and Bombardier Q400 turboprops will give the carrier long-haul, trans-ocean capacity. Initially, WestJet expects to operate four wide-body planes, deploying them on their Alberta to Hawaii winter routes beginning in late 2015. WestJet currently uses Thomas Cook pilots and Thomas Cook Boeing 757s to operate its Hawaii flights, but that service agreement expires this spring.

Cummings said the airline will be announcing additional destinations for its wide-body fleet in time for summer 2016, adding that “Europe and other opportunities” are being considered. Already, WestJet uses its single-aisle 737s to fly the four-hour distance from St. John’s Newfoundland to Dublin, Ireland — a route the airline is using as a test case to familiarize itself with the European market.

Cummings said fuel represents about 50 per cent of operating costs for a wide-body aircraft, compared to about 30 per cent for a 737 — making it harder to achieve cost advantages on the larger planes. Still, he said WestJet has been laying the groundwork for an international expansion for some time. It has a well-developed web of code shares and interline agreements and last year it launched a regional airline, Encore. Both strategies serve to feed more passengers onto the mainline WestJet network and will likely feed passengers onto future WestJet trans-ocean flights as well.

Over the past 12 months, WestJet CEO Gregg Saretsky has been increasingly open about WestJet’s ambition to one day compete directly with Air Canada on international routes in Europe, South America, and even Asia.

On Monday, Cummings declined to say how quickly WestJet could ramp up its wide-body fleet, saying only that it will likely grow “beyond what is being announced today.”

“This is a prudent, measured approach for us,” Cummings said. “We’ll get into the market and see how well we do.”

The announcement is a big deal both for WestJet and for Calgary, said Calgary-based independent aviation analyst Rick Erickson.

“My guess is we’re going to see a WestJet wide-body hangar go into Calgary and that this whole operation is going to be based here,” Erickson said. “It’s a magnificent, massive plus for Calgary as a whole.”

Erickson said the move to wide-body aircraft could also ease some of the tension that may exist between WestJet and its pilots. There have been signs of strife in recent months — including a unionization effort under way as well as the rejection by pilots of the airline’s latest contract offering. But the pilots voted 70 per cent in favour of WestJet’s wide-body plans, and Erickson said that’s not surprising.

“It’s precisely what pilots want to do. They want to fly bigger airplanes, and they want to fly to exotic, exciting locations,” he said. “I think this is a lever the carrier can use in some way. They’re not doing this just to appease the pilots, of course, but they can play on this, if you will.”

AltaCorp Capital Inc. analyst Chris Murray said in the long-term, WestJet might go after the same type of European destinations that Air Canada currently flies to with its Leisure airline, Rouge. These include places like Manchester, Nice, Barcelona, Milan, and Lisbon.

“But keep in mind they’re also going to be competing with a lot of the destinations that Air Transat flies to in the Atlantic, as well as a number of other international carriers,” Murray said.

Murray added that WestJet has done very well with the creation of Encore and the addition of its turboprop fleet. But he cautioned moving to wide-body aircraft adds an “increasing level of complexity” that takes WestJet farther away from its roots as a low-cost carrier with a simple business model.

“One of the arguments against wide-body, and has been for some time, is just how much more challenging it can be,” Murray said. “A really massive expansion to try to become a full-service, network carrier? That certainly would change a lot of the dynamics around who or what WestJet is, and would certainly be interesting to follow over the next few years.”

WestJet shares were up nearly six per cent on Monday, closing at $27.15.

astephenson@calgaryherald.com

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